On March 31, 2021, New York became the 15th state to make recreational cannabis legal with the Marijuana Regulation & Taxation Act — and experts anticipate it will become one of the biggest cannabis markets nationwide. In fact, the New York Comptroller expects that it could generate $3.1 billion in revenue annually, with New York City alone gaining $336 million. But it’s crucial to understand that before an entrepreneur can open a dispensary and start doing business in the state, there are a number of regulations that must be followed — including obtaining the necessary license.
How Does the Application Process Work?
In New York State, there are several types of licenses issued in connection with adult-use of cannabis. An entrepreneur seeking to open a dispensary should consider which of the following license types they will need for their business, depending upon whether they will also be cultivating and growing cannabis:
- Adult-use cultivator
- Adult-use nursery
- Adult-use distributor
- Adult-use cooperative
- Adult-use microbusiness
- Adult-use retail dispensary
- Adult-use on-site consumption
- Adult-use delivery
- Registered organization adult-use cultivator processor distributor retail dispensary
- Registered organization adult-use cultivator processor and distributor
It’s important to be aware that each license type has its own criteria and restrictions. For example, no person may own more than three retail dispensary licenses or on-site consumption licenses. In addition, registered organizations are not permitted to hold any other license type. However, recreational use licenses will not be issued until the new Office of Cannabis Management governed by a Cannabis Control Board is staffed and a process for issuing licenses has been put into place.
After determining which license is applicable, the next step is filling out the appropriate forms required by the state. You must also ensure any required paperwork is submitted, including your tax number and other relevant documentation.
How to Maintain Compliance
Regulatory compliance is one of the most significant challenges marijuana dispensaries can face. After you have obtained your cannabis license, it’s vital to maintain full compliance with any applicable federal, state, and local laws. Failure to do so can result in license revocation, monetary penalties, or criminal sanctions.
Importantly, each state has its own software tracking provider used for seed-to-sale traceability, tracking, and reporting to ensure compliance. BioTrackTHC is New York’s official traceability system.
Local Cannabis Restrictions and Laws
It’s essential to make sure that a city, town, or village allows dispensaries to do business before moving forward with the application process. Localities within the state are permitted to “opt-out” of permitting retail outlets and social consumption sites. Despite legalization, communities were given the option to opt out of allowing retail outlets by December 31, 2021. Several communities in Central New York have already voted to “opt-out.”
Critically, dispensaries will be subject to a 9% state tax, in addition to a 4% local tax. An additional tax must be paid by the distributors based on how much THC is contained in the product that can range from .5 cents per milligram for cannabis flower up to 3.0 cents per milligram for edibles.
Who is Responsible for the Regulations of Cannabis in New York?
The New York State Cannabis/Marijuana Regulation & Taxation Act created a Cannabis Control Board and Office of Cannabis Management, which is responsible for the regulations pertaining to adult-use marijuana. It also established the position of Chief Equity Officer — an individual who will be appointed by the Cannabis Control Board. The Office of Cannabis Management will also be responsible for overseeing New York’s Medical Marijuana Program, which is currently regulated by the New York State Department of Health.
Conclusion
If you require assistance with opening a cannabis dispensary in New York and understanding the regulations necessary for compliance, contact our team of experienced attorneys today.
